MAYNARD B

DIANE MAYNARD WAS GRATEFUL FOR THE BALANCE SHEETS THAT HER
FRIENDS PREPARED ( MAYNARD (A)) .

IN GOING OVER THE NUMBERS SHE REMARKED “ IT IS SURPRISING THAT

CASH INCREASED BY $31677 BUT THE NET INCOME WAS ONLY $ 19635. WHY
WAS THAT ?

HER FRIEND REPLIED “ A PARTIAL ANSWER TO THAT QUESTION IS TO LOOK

AT AN INCOME STATEMENT FOR JUNE. I THINK I CAN FIND THE DATA I NEED
TO PREPARE ONE FOR YOU.”

IN ADDITION TO THE DATA GIVEN IN THE PREVIOUS CASE HER FRIEND

FOUND A RECORD OF CASH RECEIPTS AND DISBURSEMENTS WHICH IS
SUMMARIZED IN EXHIBIT 1. SHE ALSO LEARNED THAT ALL ACCOUNTS
PAYABLE WERE TO VENDORS FOR PURCHSASE OF MERCHANDISE INVENTORY
AND THAT COST OF SALES WAS $39,345 IN JUNE.

PREPARE AN INCOME STATEMENT FOR JUNE. EXPLAIN THE DERIVATION OF

EACH ITEM ON THIS STATEMENT INCLUDING COST OF SALES.
EXHIBIT 1

CASH RECEIPTS AND DISBURSEMENT FOR THE MONTH OF JUNE

CASH AMOUNT CASH AMOUNT

RECEIPTS DISBUSEMENT
CASH SALES 44,420 EQUIPMENT PURCHASED 23,400
CREDIT 21,798 OTHER ASSETS PURCHASED 408
CUSTOMER
DIANE 11,700 PAYMENT ON ACCOUNTS 8517
MAYNARD PAYABLE
BANK LOAN 20,865 CASH PURCHASE OF 14,715
MERCHANDISE
CASH PURCHASE OF 1671
SUPPLIES
DIVIDENDS 11,700
WAGES PAID 5660
UTILITIES PAID 900
MISCELLANEOUS 135
PAYMENTS
TOTAL 98,783 TOTAL DISBURSEMENT 67,106
RECEIPTS

RECONCILIATION

CASH BALANCE ON JUNE 1 $ 34,983

RECEIPTS $ 98,783

SUBTOTAL $ 133766

DISBURSEMENT 67,106

CASH BALANCE ON JUNE 30 $ 66,66O

• Deferral: Delay in the recognition on
an expense already paid or a revenue
already received.
• Accrual : Recognizing an expense
that has not been paid or a revenue
that has not been received.